Why do refer a friend programs work?

Refer a Friend

Refer a friend programs have seen continued success at the world’s leading brands.  The success of refer a friend can be attributed to:

1) Trust
A 2013 Neilsen Trust study showed that consumers trust referrals from friends 18% more than any other form of advertising.

2) Targeting
Many marketers spend tons of wasted money feeding the top of their funnel attempting to target the right customers through the right AdWords and profiles. Refer a friend programs allow your customer base to do the work for you. Your customers know better than anyone who would be most likely to buy a product. Brands with a refer a friend program are making it easy for your customers to create organic growth by targeting the RIGHT customers. Even better, customers that come in through referrals are 4-5x more likely to refer another friend.

3) Better quality customers
A recent Extole study of over 200 refer a friend programs shows that referred customers are the highest value customers. Referrals are 18% less likely to churn and have a 25% higher customer lifetime value (LTV).

Looking for more information on how to build the best refer a friend program? Check out our 2016 best practices guide.

Check Out Our 2023 Best Practices Guide.

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